Make sure to watch the video at site also..
In July, Ben Bernanke told a town hall meeting, "I was not going to be the Federal Reserve chairman who presided over the second Great Depression." According to New York Times columnist Paul Krugman in that regard he's succeeded. Bernanke's rescue of the financial sector in tandem with the Obama Administration's stimulus plan prevented a "full replay" of the Great Depression, the Nobel Prize-winning economist writes.
But like President Bush declaring "Mission Accomplished" in 2003, Elliott Wave International founder, Bob Prechter thinks Krugman and Bernanke are premature in declaring victory over the credit crunch. Prechter, who famously predicted the 1987 stock market crash, tells Tech Ticker "the march towards depression, which is being fueled by deflationary trend, is pretty well intact."
So forget all you've heard about recovery and inflation, "we've only seen the first
This is long but it entails facts and figures and covers a lot more you should know about in addition to the "Real" Unemployment Situation...
What Will Future Conditions Look Like?
When he was presented with the July unemployment numbers, even President Obama tempered his enthusiasm by saying that the official unemployment numbers will rise to 10% later this year.
And the Federal Reserve predicted in July that high unemployment will cause the eventual economic recovery to be drawn out and weak for years to come. In other words, the Fed is worried that we're trapped in a vicious cycle, where a poor economy will lead to high unemployment numbers, and unemployment will lead to less consumer spending which will worsen the economy. Here is a snippet..
And former chief IMF economist Simon Johnson notes that a vicious cycle also exists between unemployment and property foreclosures:
Unemployment is always a lagging indicator, and given the record low number of average hour
Remember, good news is to be trumpeted, and bad news (or anything perceived as such) is to be ignored. But lest you worry, with the index down so severely THIS week when it invariably rebounds it won’t be ignored - it will be a lead story for ‘reasons you need to buy stocks’ on certain financial entertainment TeeVee stations.
•The Baltic Dry Index, a measure of shipping costs for commodities, had its worst week since October as Chinese demand for shipments of coal and iron ore slowed. The index tracking transportation costs on international trade routes today slid 135 points, or 4.6 percent, to 2,772 points, according to the Baltic Exchange. That took its weekly drop to 17 percent, the most since the end of October.
•“The Chinese have backed off and it’s starting to show in the number of shipments this month,” a Cape Town-based official at Island View Shipping SA, Africa’s biggest commodities shipping line, said by phone today. “Iron ore and coal seem to be slowing down.”
Bailouts for financial firms and billions in tax revenue lost because of the recession drove the deficit to a record $1.3 trillion in July, according to the independent Congressional Budget Office (CBO).
Tax receipts that have fallen due to the poor economy and increased spending to save car companies, banks and mortgage firms were major contributors to the federal deficit, according to CBO, which provides official budget numbers for Congress. The federal deficit grew by another $181 billion in July.
Falling tax receipts and increased spending on bailouts for auto companies and the financial sector and for the economic stimulus package added to the deficit, according to CBO, which provides official budget numbers for Congress.
When everyone is thinking the same thing, it never happens, and what everyone is thinking right now is that when August is over, and we get down to business, this market's going to be in for some hurt.
Folks have been saying it all summer, as bulls make mincemeat of bears without mercy. And now traders are starting to place their bets on the wheels coming off soon.
Not to scare you, but the situation is actually worse than it seems. Over the years, the government has changed the way it counts the unemployed. An example of this is the criticized Birth-Death Model which was added in 2000. The model is designed to account for the birth and death of businesses and the resultant lag in survey data. Unfortunately, the model doesn’t work that well during economic contractions (like we have now) and consistently overstates the number of jobs being created each month.
John Williams of Shadow Government Statistics specializes in removing these questionable tweaks to the government’s statistical data to better align current numbers with the methodology used to gather historical data. After reviewing the data, Williams believes that “the June jobs loss likely exceeded 700,000.” David Rosenberg of Gluskin Sheff notes that the fall in the number of hours worked in June (to a record low of 33 per week) is equivalent to a loss of more than 800,000 jobs. There
Eric Sprott is the Canadian business guru who predicted the banking collapse last year, and is #4 in Canada’s top successful investors. He’s one of the few who’s “…net worth went up over the past five months, thanks to the 30% increase of the value of his controlling stake in mutual fund firm Sprott Inc., parent of Sprott Asset Management.” You’ll find more of his insight with other articles here.
So without further adieu, I present to you a more informed perspective, complete with charts, graphs and some real data “tough love” on what’s coming our way. Below is the embed TOCdoc format. However if you prefer, here’s a PDF version to download, save… or just for easier viewing.
With all this blather about “green shoots” and economic “recovery” and new “bull market,” I thought I’d inject a little reality into the collective financial dialogue. The following are ALL true, all valid, and all horrifying…
Enjoy.
1) High Frequency Trading Programs account for 70% of market volume
In the real economy, unemployment is at Depression-era levels (see this, this and this).
In the real economy, bank loan loss rates will be higher than the Depression.
In the real economy, government revenue is at its lowest level since the Depression, and most states are on the verge of bankruptcy.
In the real economy, the world economy is crashing faster than during the Depression (and see this).
But in the make-believe world of the government and the financial giants, the recession is over.
How do they do it?
Well, as I noted a couple of days ago, the boys use:
The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab.
MORE NEWS
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The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.
Americans in the peak year of 2007 had a net worth of $64.2 trillion. A sizeable portion of that net worth has evaporated. In fact, that $64.2 trillion is now valued at $50.3 trillion. A 21 percent cut to the American household balance sheet.
Does this mean the pork filled stimulus is not working? Wheres the Jobs?
President Barack Obama’s top economic officials said in interviews aired Sunday that the administration may support an extension in unemployment benefits.
Some on Capitol Hill view that as a second stimulus package, although it is unlikely to be billed that way, because of rising concern about government spending.
“We’ll do what’s necessary to make appropriate unemployment benefits available,” national economic adviser Lawrence Summers said on NBC’s “Meet the Press.”
In yesterday's CHART OF THE DAY we noted the similarities between this current rally and the famous rally between 1929 and 1930. Today, David Rosenberg picks up on the same thing, and fills it out a little more.
1930 revisited.
We've put together an amazing, fool-making rally since the market hit its lows in early March. Of course, before you break out the champagne, remember that a strong bull run can happen during a long-term decline.
We have eclipsed most such precedents. But we did have one big bull run of nearly the exact same length and magnitude between November, 1929 and April, 1930. And you know what happened after that.
As I have previously pointed out, the current economic crisis could be worse than the Great Depression. See this and this.
I have also pointed out that two economists said as recently as June that the global economic downturn was worse than the Great Depression.
But if you don't believe them, here it is from the horse's mouth . . .
Ben Bernanke said 3 days ago:
“Gold just seems to make sense; it’s a store of value,” Chief Executive Officer Edward Zore said in an interview following his comments at a conference hosted by Standard & Poor’s in Brooklyn. “In the Depression, gold did very, very well.”
Walk into your local gun store and ask why there is an ammo shortage, and you'll hear inane speculation coupled with a conspiracy theory or two. In reality the supply chain for ammunition is relatively inelastic, and is easily overwhelmed by a su
The Toxic Twins of Steve Tyler and Joe Perry ain't got nothing on the Toxic Trio of Tim Geitner, Alan Greenspan, and Ben Bernanke. Unlike Tyler and Perry, who mainly hurt themselves with their actions, the Toxic Trio is proving lethal to the hea
They say dark days lie ahead for the economy. But, whatever happens, we don’t have to go hungry. We can feed ourselves. Come on my Beloved Country, let’s get organized. Let’s start digging. Let’s do something economically beneficial, wonderful, brill
Things have certainly changed in the last year or two. Somehow, the part of the economy that is felt in the pocketbooks of average Citizens has gone from super-heated and ever-expanding, to ice-cold and losing ground--at about the same incredible ra
Acting in your ‘best interest, of course, Congress, the Senate and the latest Messiah decided to ‘borrow’ $1 Trillion dollars that hasn’t even been earned yet. Now there’s a trick.
Of course, step one to recovery is to replace the income tax with nothing, but whether you do it yourself or you wait for Congress to do it for you, there is a lot more going on than the old media is revealing. Nick Turse presents The Depression.
The people whose mortgages the gov't will bailout this year will be saved ... until their mortgages reset in 5 years. This only delays the inevitable mass defaults/foreclosures (until after the 2012 elections -- coincidence?).
Notice the plan
Alcoa Inc., the world's third-largest aluminum maker, said Tuesday it will cut 13,500 jobs, or 13 percent of its work force, and slash spending and output to cope with the global economic slowdown.
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